DuPont ( DD ) beat expectations
in the first quarter of 2013 riding on strength in its agriculture
business, reflected by strong corn seeds and crop protection
products sales. Gains in agriculture helped it to offset the
lingering weakness across titanium dioxide and photovoltaic
The Delaware-based chemical titan posted adjusted earnings from
continuing operations of $1.56 per share for the quarter, topping
the Zacks Consensus Estimate of $1.54. The adjusted earnings
exclude one-time items including charges of $35 million associated
with customer claims related to the use of an herbicide and a
Including one-time items, DuPont clocked earnings from continuing
operation of $1.47 per share in the quarter compared with $1.48 per
share earned in the prior-year quarter. Consolidated net income, as
reported, more than doubled year over year to $3.35 billion or
$3.58 per share from $1.49 billion or $1.58 per share a year
Net sales rose 2% year over year to $10,408 million, as higher
sales volumes and pricing was offset by negative currency impact.
Sales beat the Zacks Consensus Estimate of $10,378 million.
DuPont's Agriculture segment delivered double-digit gain in the
quarter. Volume improvement was driven by gains in agriculture
across North and Latin America.
Separately, DuPont's Board approved a 5% increase in its quarterly
DuPont's shares, which are up roughly 12% so far this year, rose
roughly 1% in pre-market trading.
Agriculture: Sales climbed 14% year over year to
$4.7 billion in the reported quarter. An 8% gain in volumes coupled
with a 6% rise in pricing more than offset the impact of higher
input costs. DuPont saw strong sales of corn seeds across North
America and Brazil in the quarter. Severe drought in the U.S
boosted seeds sales in the quarter.
Electronics & Communications: Sales fell 9%
to $616 million on lower volume and pricing. Sales were affected by
weakness in photovoltaic markets.
Industrial Biosciences: Sales were flat year over
year at $289 million. Strong demand of Sorona polymer and gains in
food enzymes was offset by weak enzyme demand for ethanol.
Nutrition & Health: Sales rose 7% to $868
million on healthy demand for probiotics and specialty protein
solution and better pricing, partly marred by higher raw material
Performance Chemicals: Sales slipped 17% to $1.6
billion on account of a 6% decline in volumes and 11% lower selling
prices. Lower fluoropolymers demand across North America and Asia
Pacific coupled with declining prices in the titanium dioxide
market contributed to the decline.
Performance Materials: Sales went down 3% to
roughly $1.6 billion as a 1% gain in volumes was more than offset
by a 3% decline in selling prices. Industrial and electronics
markets continued to show weakness while weak demand was seen in
the European automotive market.DU PONT (EI) DE (DD): Free Stock Analysis
ReportDOW CHEMICAL (DOW): Free Stock Analysis ReportEASTMAN CHEM CO (EMN): Free Stock Analysis
ReportMONSANTO CO-NEW (MON): Free Stock Analysis
ReportTo read this article on Zacks.com click here.Zacks Investment
Safety & Protection: Sales fell 4% to $907
million on weaker mix and declined plant utilization. Lower demand
for military protection products and sustained weakness in specific
industrial markets hurt sales in the quarter.
DuPont, during the quarter, closed the sale of its performance
coatings business to private equity firm Carlyle Group for $4.9
billion in cash. The move is intended to better focus on accretive
businesses like agriculture and nutrition, bio-based industrials
and advanced materials.
The Performance Coatings segment has been classified as
discontinued operations and is excluded from the company's
continuing operations results, on a retroactive basis.
Financial Health and Shareholder Returns
DuPont ended the quarter with cash and cash equivalents of roughly
$6.6 billion, a nearly two-fold year over year rise. Long-term
borrowings and capital lease obligations was stable year over year
at $11.3 billion.
DuPont has raised its quarterly dividend from 43 cents to 45 cents
per share ($1.80 per share annualized). The dividend is payable on
Jun 12, 2013, to stockholders of record as of May 15, 2013.
DuPont has backed its full-year guidance and continues to expect
adjusted earnings to rise 2%-7% year over year to a band of $3.85
to $4.05 per share. The guidance assumes continued in strength in
the agricultural market and improved global industrial market
demand. The current corresponding Zacks Consensus Estimate is
DuPont also anticipated operating earnings per share for
first-half 2013 to decline 7%-9% year over year, reflecting lower
earnings from the Performance Chemicals unit.
In a major move, DuPont and Monsanto ( MON ) recently settled
their lawsuits against each other, involving the unauthorized use
of Monsanto's Roundup Ready technology in corn and soybeans by the
former. The parties entered into a new pact, under which, DuPont
will pay Monsanto royalties in excess of $1.75 billion over a
decade for rights to Monsanto's next-generation soybean
DuPont's first quarter results reflect the underlying condition of
the chemical industry. Its compatriot Dow Chemical
( DOW ), which is
slated to report on Apr 25, will shed more light on the end market
scenario and demand trend for chemical products.
DuPont currently carries a short-term Zacks Rank #3 (Hold).
Another chemical major, Eastman Chemical ( EMN ), which is slated
to report its first quarter earnings after the closing bell on Apr
25, carries a Zacks Rank #2 (Buy).